Takeaway from GAI NY 2022 -- Macro Drivers Impact on Global Supply Chains

By Michelle Pelletier Marshall, Global AgInvesting Media (May 10, 2022)

The 14th annual Global AgInvesting (one of our sister events), held back in NYC for the first time since the pandemic, was very well-received and attended by nearly 800 in the sector, from institutional investors to family office managers to innovators and agribusinesses. Topics covered included managing water risk, measuring farmland investment performance, the outlook for tech integration, opportunities in natural capital, and much more. Here's a peak at one of the presentations from Global AgInvesting 2022.

Geopolitical Macro Drivers Impacting Global Agriculture Supply Chains With speaker Deborah Perkins, Global Head of Food & Agribusiness, ING Bank

Deborah Perkins, global head of food & agribusiness with ING Bank since 2017, hails from Australia, and works with her team to finance food and agribusiness companies across the globe. With stints at Rabobank and the State Bank of Western Australia, Perkins now calls Dallas, Texas, home. She covered the effects of market dynamics on the food and ag sector. Here’s a snippet of what she had to say:

“We are going to have a population of 9.7 billion by 2050 and 10 billion by 2100 so we are going to have more people to feed which is going to continue to drive the demand for food, and mean that us as the ag sector need to look for ways to continue increasing production. There's also income growth occurring in developing countries which means that they're moving away from a subsistence diet, and they want to consume more protein, more dairy, more processed foods.”

And food prices, she noted, are at the highest level seen since 2011, up 28 percent globally in 2021. And while, Perkins noted, “we might blame it [higher food prices] on Ukraine, we might blame it on the pandemic. But these things were going up prior to that, which gives the indication that food prices really are a reflection of the run up that we've seen in commodity prices.” Perkins discussed some of the factors causing the increase in food production/availability across the supply chain:

Transportation – Approximately 80 percent of global trade occurs via ocean trade and containers. During COVID, supply chain disruptions occurred when workers were not able to get to the ports to unload products and trucks were idled from making deliveries. Containers ended up being stranded in ports, resulting in container shortages and mismatched options for containers.

Labor – “It doesn't matter who I talk to or where they are in the world or what industry they're in, everybody is dealing with challenges with labor,” said Perkins. “So as part of your investment strategy, that could be something to keep in mind as well. Where are the workers that you're going to need for your property going to come from? Do you need to provide housing in addition to some of the other strategies and perks needed to retain employees?”

Perkins noted that the flip side of labor shortages was increased adoption of technology and automation use in ag. “This in turn will change the skill set of the people that we need – you’re going to have more engineers, more people that can actually operate and deal with the issues that might arise as a result of automation.”

Energy prices – The global increase in fuel passes through into a direct increase in the cost of producing food. But, noted Perkins, there are other indirect implications of that as well, such as that energy is one of the key inputs of fertilizer. So if energy prices are going up, fertilizer prices are going up too, exacerbated by the Ukraine, Russia situation because Russia is a key producer of fertilizers.

“Yes, commodity prices are really, really high, but if the input costs are also going up exponentially, that means that the margins for the farmers will not be as high as what they would be if they were just getting higher prices,” said Perkins. “And that will lead to various implications for their investment strategies.”

Climate – Droughts, floods, other extreme weather conditions, not to mention the issue of carbon capturing, have plagued the globe recently, and all of this has an impact on plantings, production, and supply.

Learn more about the speakers and presentations from Global AgInvesting 2022 here, or join us for our next event, Global AgInvesting Asia, October 20-21, 2022, in Tokyo.

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- Michelle Pelletier Marshall is contributing editor and author for HighQuest Partners’ GAI News and Unconventional Ag, and managing editor for its WIA Today blog. Additionally, she is the company’s Senior PR/Media Manager. She can be reached at marshall@highquestpartners.com.

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